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The self-regulatory organization FINRA and the North American Securities Administrators Association have issued investor alarms about bitcoin.177178
An official investigation into bitcoin dealers was reported in May 2018. The U.S. Justice Department launched an investigation into possible price manipulation, including the techniques of spoofing and wash trades.180181182 Traders in the U.S., the U.K, South Korea, and maybe other countries are being investigated. Brett Redfearn, head of the U.S.
The U.S. national investigation was motivated by concerns of possible manipulation during futures settlement dates. The final settlement price of CME bitcoin futures is determined by prices on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first delivery date in January 2018, the CME asked extensive detailed trading information but several of the exchanges refused to provide it and afterwards provided only limited data.
Academic study published in the Journal of Monetary Economics concluded that cost manipulation occurred during the Mt Gox bitcoin theft and that the marketplace remains vulnerable to manipulation.186 The history of hacks, fraud and theft involving bitcoin dates back to 2011.187
Research by John M. Griffin and Amin Shams in 2018 indicates that trading associated with increases in the amount of the Tether cryptocurrency and associated trading in the Bitfinex exchange account for about half of the purchase price increase in bitcoin in overdue 2017.188189
J.L. van der Velde, CEO of both Bitfinex and Tether, denied that the claims of price manipulation:"Bitfinex nor Tether is, or has ever, engaged in any sort of market or cost manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex. "190
The Bank for International Settlements outlined several criticisms of bitcoin in Chapter V of their 2018 annual report. The criticisms include the absence of equilibrium in bitcoin's price, the high energy consumption, high and variable transactions costs, the bad security and fraud at cryptocurrency exchanges, vulnerability to debasement (from forking), and also the influence of miners.191192193.
Bitcoin and other cryptocurrencies have been identified as economic bubbles by at least eight Nobel Memorial Prize in Economic Sciences laureates, including Robert Shiller,195 Joseph Stiglitz,196 and Richard Thaler.19713 Noted Keyensian economist Paul Krugman wrote in his New York Times column criticizing bitcoin, calling it a bubble and a fraud;198 and professor Nouriel Roubini of New York University known as bitcoin that the"mother of all bubbles. "199 Central bankers, including former Federal Reserve Chairman Alan Greenspan,200 investors like Warren Buffett,201202 and George Soros203 have said similar opinions, as have business executives like Jamie Dimon and Jack Ma.204.
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Bitcoin has been criticized for the amount of electricity consumed by mining. As of 2015update, The Economist estimated that even though all miners used modern amenities, the combined power consumption would be 166.7 megawatts (1.46 terawatt-hours per year).133
In the end of 2017, the worldwide bitcoin mining that site activity has been estimated to consume between one and four gigawatts of power.205 Politico noted that the even high-end estimates of bitcoin's total consumption levels amount to only about 6% of the total power consumed by the global banking industry, and even when bitcoin's consumption levels increased 100 fold from the current degrees, bitcoin's consumption would still only amount to approximately 2% of global power consumption.206.
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To reduce the costs, bitcoin miners have put up in areas like Iceland where geothermal energy is cheap and cooling Arctic atmosphere is free.207 Bitcoin miners are known to use hydroelectric power in Tibet, Quebec, Washington (state), and Austria to more info here reduce electricity costs.206208209210 Miners are drawn to providers like Hydro Quebec who have energy surpluses.211 According to a University of Cambridge study, much of bitcoin mining is done in China, where electricity has been subsidized by the government.212213.
A variety of journalists,207214 economists,215216 and the central bank of Estonia217 have voiced concerns that bitcoin is a Ponzi scheme. In 2013, Eric Posner, a law professor at the University of Chicago, stated that"a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion. "218 A 2014 report from the World Bank concluded that bitcoin was not a deliberate Ponzi scheme.219:7 The Swiss Federal Council220:21 examined the concerns that bitcoin might be a pyramid scheme; it concluded that,"Since in the case of bitcoin the typical guarantees of profits are lacking, it cannot be assumed that bitcoin is a pyramid scheme" In July 2017, billionaire Howard Marks called bitcoin as a pyramid scheme.221.